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Capital gains tax changes hit firms

A CHANGE in accounting rules to be implemented at the end of this year will have a big impact on the balance sheets of Irish private companies. Under new standards the potential impact of capital gains tax (CGT) on investment property assets must be taken into account when filing returns.

“The large number of Irish investors who have set up companies to invest in property at home, in the UK and mainland Europe in recent years will be particularly affected by this change,” said Aidan Clifford, the technical manager at the Association of Chartered Certified Accountants (ACCA) Ireland.

Under International Financial Reporting Standards (IFRS), which is being adopted by all European Union publicly quoted companies this year, capital gains tax liabilities must be deducted from balance sheet valuations of investment property. This is not required by Irish GAAP (Generally Accepted Accounting Principles), the system used by almost all private companies